Taylor the downfall of money; germanys hyperinflation and the destruction of the middle class (2013)

Just as the Schlieffen Plan was put into action by the Imperial General Staff in an arguably fatallymodified form during the last days of July and first days of August 1914, so the men w

For Alice

‘At the outset the masses misinterpreted it as nothing more than a scandalous rise in prices; only later,under the name of inflation, the process was correctly comprehended as the downfall of money.’

- Konrad Heiden, Der Führer: Hitler’s Rise to Power (1944)

‘By a continuing process of inflation, governments can confiscate , secretly and unobserved, animportant part of the wealth of their citizens By this method, they not only confiscate, but theyconfiscate arbitrarily; and, while the process impoverishes many, it actually enriches some Thesight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in theequity of the existing distribution of wealth.’

- John Maynard Keynes

‘Inflation is a crowd phenomenon one can describe it as a witches’ Sabbath of devaluationwhere men and the units of their money have the strongest effects on each other The one stands forthe other, men feeling themselves as “bad” as their money; and this becomes worse and worse.Together they are all at its mercy and all feel equally worthless.’

- Elias Canetti, Crowds and Power

‘Believe me, our misery will increase The scoundrel will get by But the decent, solidbusinessman who doesn’t speculate will be utterly crushed; first the little fellow on the bottom, but

in the end the bi g fellow on top too But the scoundrel and the swindler will remain, to p andbottom The reason: because the state itself has become the biggest swindler and crook A robbers’state!’

Introduction

1 Finding the Money for the End of the World

2 Loser Pays All

3 From Triumph to Disaster

4 ‘I Hate the Social Revolution Like Sin’

5 Salaries Are Still Being Paid

20 ‘It Is Too Much’

21 The Starving Billionaires

22 Desperate Measures

23 Everyone Wants a Dictator

24 Breaking the Fever

A Note on the Author

By the Same Author

Also by Frederick Taylor

This book seeks to provide a narrative description of the origins, progression and effects of theGerman hyperinflation and to place this extraordinary phenomenon in the turbulent, ominous humancontext of the world in which it occurred It is not by any means a book about economics in thenarrow sense The ills of the German currency between 1914 and 1924 arose out of, and then fedback into, the ills of the country itself It contains elements of economic explanation, without whichthere would be no background to the story It is, however, also about war, politics, greed, anger, fear,defiance, desire and (a key element, even if usually in short supply at that time) hope, and the way inwhich all these things affected and reflected the lives of ordinary people The history caused theeconomics, the economics brought on more history, and back and forth and so it went, in a dizzyingand frightening continuation that, even when it appeared to end, haunted – and arguably still haunts –the German national narrative

Nine decades ago, the most populous, technologically advanced and industrious country incontinental Europe had suffered a terrible reversal of fortune Germany had fought and lost a greatwar that cost her 2 million young men dead, large chunks of territory and vast amounts of treasure.Vengeful enemies had declared their intention to make Germany pay, not just for her own expenses ofthat war, but for theirs too Meanwhile, the hereditary dynasties that had ruled in Germany for athousand years, grand symbols of stability and continuity, were overthrown in a matter of days –remarkably easily, in fact – by their mutinous subjects, who blamed them, the archetypal warlords, fornot leading Germany to victory

The familiar, once unshakeable representatives of the monarchical state had been replaced inNovember 1918 by parliamentary politicians who, whatever their virtues, lacked both the glamour ofaristocracy and the authority that it had seemed, however spuriously, to confer Those politicians,many from humble backgrounds and experiencing real power for the first time, knew that the future ofthe new post-war Germany depended on producing order from chaos, prosperity from deprivation,respect from humiliation They were also determined that, despite the defeat of the Reich’s armiesand the harsh demands of the countries that had vanquished them, the ordinary German people, whohad suffered so much in four bitter years of war, should be able to look forward to a better, moresecure future The question was, given the country’s problems, the demands of the victorious enemyand the (literally) murderous divisions in German society, could these men – on the whole ratherordinary individuals – succeed in this awesomely difficult task?

The state the politicians coaxed into being after the revolution came to be known as the ‘WeimarRepublic’ The constitution-makers who met in early 1919 had been forced to evacuate themselvesfrom Berlin to this attractive, modest-sized central German city (population at the end of the SecondWorld War around 35,000), because the capital was still too violent and politically unstable for theirsafety to be guaranteed They remained there until the situation in Berlin was somewhat restored

Weimar had become famous 120 years or so previously as the home of the great writer JohannWolfgang von Goethe, Germany’s Shakespeare - and more In a long life, spanning the eighteenth andnineteenth centuries, Goethe had also gained renown as a statesman and scientist A fittingenvironment for Germany’s new start, perhaps, despite the circumstances From now on, though, tothe wider world the first thing the name would bring to mind would no longer be the greatest

achievements of the German enlightenment Instead, it would conjure up the struggles, and eventuallythe failure, of the first German democracy Beyond this, we now know, lay the rise of Hitler and themost terrible war in human history.

In some important ways, though, for all its problems the fifteen-year democratic interluderepresented a signpost to the future Our future It was a consumer society It had cinemas and shops, alively and astonishingly free press, and sports events of a scale and popularity unknown just a fewyears earlier in more untroubled times And, even while the inflation was laying waste to some parts

of the economy, Germany had its first passenger airlines, opening up global opportunities for businessand pleasure for its citizens It also saw the beginnings of radio broadcasting to a public as eager fordistraction as its twenty-first-century counterparts

Nonetheless, because of what followed, ‘Weimar’ would become an adjective, ruefully affixed toindicate something well-meaning and even brilliant, but fatally divided and doomed WeimarRepublic Weimar Culture Weimar Decadence Weimar Inflation

This, then, is the core of the story that will be told here But it would be of academic interest if wecouldn’t keenly feel the resonances in our own time

After sixty years of political stability and more or less steady economic growth, the once-solidedifice of post-war Europe finds itself in a state of decay, and facing a crisis of identity that threatens

to turn ugly The European Union, which was supposed to ensure that a third universal war wouldnever happen, is at risk of disintegration Hard-edged nationalism is back in fashion, and it is at least

in part basing itself on economic differentials Far-right chaos-makers stalk swathes of the continent,from Budapest to Bayonne, Vienna to Vilnius Racism and intolerance are manifested in virulentforms unseen since the 1930s Last but not least, during the past few years the global financial tide hasgone out, revealing that the apparently sound underpinnings of many European economies were in factrickety and rotten

These twenty-first-century countries borrowed too much and spent too much They have been forced

to tell their citizens that the generous welfare provisions and public services they have come to takefor granted are unaffordable The eurozone union was supposed to bring the continent’s economiesinto harmony and balance under a common currency Just as the political union was designed to avoidnew military conflicts, so the rise of the euro would, such was the hope, end for ever the threat offinancial anarchy for countries that had suffered so much from it in the past hundred years Now, theeuro’s days seem numbered, and the continent’s future more uncertain than at any time since 1945

It is true that, at the time of writing, runaway inflation is not at the root of the problem in Europe.Rather, it is the austerity policies being forced on the troubled members of the eurozone as the price

of staying in this stable currency and avoiding just such an inflation There can be little doubt, though,that if and when Greece, Spain, Ireland or any other of these countries left the euro and returned tohaving their own currencies - overseen once again by independent finance ministers and central banks-these currencies would rapidly depreciate against the euro and other major currencies This wouldbring on a steep decline in the exchange rate, capital flight on the part of foreign (and home-grown)investors, and sky-high interest rates, possibly progressing hence to serious inflation, and perhapseven, if unchecked, to hyperinflation Countries whose economies are out of whack can be choked bytoo little money or too much

There is, moreover, one other major – one might say all-important – difference between thesituation in the 1920s and our current plight Then, it was Germany that was the reprobate of the story

Europe’s foremost economy found itself in a state of financial chaos, its currency all but worthless.Furthermore, it was generally agreed that she had only herself to blame Ninety years ago, Germanywas branded the world’s miscreant, refusing to accept financial disciplines as other nations did.Germany was spending money she did not have; molly-coddling her people with over-generouswelfare schemes; dishonestly devising strategies to defraud bondholders and investors; deliberately –

so it was alleged - allowing her economy to get out of control so that she could shirk her financialcommitments and avoid payment of debts It was countries such as Britain, the USA, Italy, Belgiumand France that were wagging their collective national fingers at Germany in the early 1920s

Now, ninety years on, it is the debt-ridden countries surrounding a prosperous, stable Germany thatteeter on the brink of bankruptcy and – should the euro be abandoned – the collapse of their monetarysystems, with all the horrors that might follow And now it is Germany that takes the high moral tone.From Berlin these days all the talk is of sound finances, stern austerity measures for the ‘bad’countries, of loans granted only under the strictest conditions It’s been suggested that if Greece, Italy,Portugal, Ireland and the rest want to be lent the money (chiefly by Germany, of course) that will savetheir economies, then they will have to guarantee those loans with their gold reserves In other words,although, again at time of writing, the euro still exists, Germany wants precious metal backing in caseone day it doesn’t, and so whatever currencies the debtors reintroduce prove to be more or lessworthless We are back, so many years later, to the central question we had long thought dealt with:what happens when we lose confidence in our money?

Of course, there are differences between the current disorder and the crisis that followed the FirstWorld War The problems of the 1920s originated in the destruction of a hitherto stable global tradingsystem, with Europe at its heart, as the consequence of an appallingly bloody and morally perniciousbreakdown of peaceful relations between the great powers Those of the early twenty-first centurycan be seen as occurring against the backdrop of something like the opposite: the onset of a newglobal trading system, with the Pacific and Asia at its centre, coinciding with the end of the long,credit-fuelled boom that the West indulged in after the end of the Cold War in Europe and theoutbreak of peace between the great powers It might have been wars between the great powers thatruined the twentieth century, but in the first years of the twenty-first it was arguably the lack of them

So much for the ‘big picture’ However, what really matters to the individual or family orcommunity in any war or economic crisis is not what these events signify for the world order, butwhat they mean for them Whether the victim is the Greek engineer reduced to poverty by twenty-first-century austerity, the Irish civil servant sent to the unemployment queue, the American auto workerwhose home has been foreclosed on, or the debt-laden British university graduate unable to find ajob, every economic crisis feels personal The same went for the Germany of the 1920s: theuniversity teacher, once a high-status and prosperous figure in society, whose fees and salary nolonger put food on his family’s table or offered a decent future for his children; the war widow whosepension became worth less with every passing week – even, towards the end, every passing day –until it was literally worthless; the small craftsman, his business turnover plunging, ransacking theattic for family possessions, however humble, to sell at auction and so get through the week The bigpicture, on proper examination, is actually a vast mosaic of microscopic scenarios, all intense andurgent for those lonely millions who struggle to inhabit them

So this is the story of generals and bankers and politicians And, equally, of clerks and industrialworkers and widows and soldiers and small business people Their society is historically distinct

from ours, yet all too easily recognisable.

The downfall of money proved, in the final analysis, to augur the downfall of all We can only hopethat, decades from now, when the story of our own anxious times is properly told, it has a happierending

1 Finding the Money for the End of the World

Not so long ago, a friend sent me a postcard from Berlin I still have it pinned to my office wall Thecard carries a close-up, almost intimate view of the great Berlin thoroughfare Unter den Linden It isdated 1910

The photograph reproduced in that postcard captures the zenith of Kaiser Wilhelm II’s rule overGermany The country, united for a mere forty years, but buoyed by sensationally rapid industrialdevelopment and possessed, by consensus, of Europe’s most effective army, seemed destined forworld-power status Nevertheless, the scene on Unter den Linden is a relaxed one In the picture it issummer Dapperly dressed flâneurs and their ladies saunter along the leafy boulevard or disportthemselves on benches To use a classical comparison, this city looks like Athens, not Sparta Thetime, according to the public clock, is half past noon

Across the wide street, for 200 years Berlin’s most glamorous thoroughfare, we see Café Bauer, thebest known of the Viennese-style coffee houses that had gained in popularity towards the end of thenineteenth century Perhaps the café is the true target of the photographer, rather than the elegantBerliners who people the foreground This may even be a publicity shot – the Bauer family hadrecently sold their establishment to a large catering company – which is why it has been preservedand immortalised in a commercial postcard and why the street, the café, and even the human beings inthe image look their very best All the same, the air of prosperity, stability and optimism thatpermeates the scene is convincing These are, by the look of them, enviable human beings living in anenviable city in an enviable country, at a time when Germany was continental Europe’s mostpowerful and efficient country, and Europe itself still ruled the world

That world was, as we now know, approaching its end Soon it would be gone for ever.Astonishingly, considering how favourable the fundamentals of the country seemed at that juncture,this was the last time until well into the latter half of the twentieth century that Germany would besimultaneously fully solvent, fully employed and fully at peace

Four years later, in much the same season, the flâneurs had gone In their place, crowds thronged towatch young Berliners parade, smartly dressed this time not in elegant summer suits but in field-greyuniforms and spiked helmets, off to war At the end of July 1914, the latest in a series of diplomaticcrises – in this case arising out of the assassination of the heir to the Austro-Hungarian imperialthrone by Serb nationalists – had finally tipped Europe over the edge The interlocking mechanism ofalliances and their concomitant military imperatives had turned a regional problem into a continent-wide conflagration This was a war that seemed to promise much for the Kaiser’s Germany but wouldend instead in military defeat, human catastrophe and economic ruin

Such a terrible outcome must have seemed inconceivable to the vast majority of Wilhelm II’ssubjects As she entered the war, Germany appeared to be blessed with great strengths The Reichboasted rich iron and coal deposits (much of it in areas annexed from France in 1871), a boomingindustrial base, a skilled and industrious population of some 68 million, and, of course, a feared and

admired military machine Even before general mobilisation, the German army disposed of half amillion men under arms Millions more trained former conscripts could be – and were – summoned tothe colours within weeks and distributed to the various fronts by way of an efficient Germany-widerailway system that had been adapted and extended with precisely such military needs in mind.

Every German knew these things What most did not realise was that she also suffered fromweaknesses, weaknesses that her enemies were either spared, or shared only in part First, Germanywas tied to the moribund Austro-Hungarian Empire, whose gilded façade concealed a snake-pit ofwarring nationalities, and whose frantic attempts to hold on to its recently acquired Balkan territorieshad caused the war in the first place In her alliance with Austria-Hungary, Germany was, as thesaying in Berlin went, ‘shackled to a corpse’ Second, despite frantic attempts to build a German navy

to rival Britain’s, the Reich and her allies, known collectively as ‘the Central Powers’, wereessentially landlocked, susceptible to a British sea blockade that would gradually reduce theirpopulations to a state of semi-starvation And third, for all her confidence and martial excellence, inthe final analysis Imperial Germany was short of the money she would need to fight this war, andmore lacking still in ways of acquiring it

Those who controlled the Reich’s finances were well aware of the problems that would arise if thecountry undertook a major war against the ‘Triple Entente’ of France, Russia and Britain So far assuch a conflict’s military side was concerned, the Imperial General Staff had a scheme to deal withthis by means of a massive, no-holds-barred attack through neutral Belgium against France, delivering

a swift knockout blow that would enable Germany to turn its full strength quickly against the ‘Russiansteamroller’ to the east The original plan had been developed almost ten years earlier under the lateChief of the Prussian General Staff, Field Marshal Count Alfred von Schlieffen, and though it hadbeen modified since, in the history books it still bears his name Likewise, the financial mandarins atthe Reichsbank in Berlin – founded after German reunification in 1871 to manage the value andvolume of the new nation’s currency – had reacted to the increasingly unsettled international scene bydeveloping a secret blueprint that would enable the country to rise above its financial limitations forthe duration

Of course, like all the major powers that went to war in the summer of 1914, Germany believedthat, if she had to fight, she would win quickly So, any radical measures taken to secure the financialsinews of war would, it was thought, be pretty short term in nature

The planners’ way of thinking seemed justified by past events During the hundred years since thetwenty-year struggle against Napoleon had been decided at the Battle of Waterloo, Prussia and itsGerman allies had needed to fight no war longer than a few months in duration Two out of the threewars that Otto von Bismarck, Chancellor of German unification, had won during the forced march tonationhood (against Denmark and against Austria) lasted a matter of weeks Even the third, the defeat

of France, though dragged out to six months, from the outbreak of war on 19 July 1870 to the formalsurrender of Paris on 28 January 1871, had been all but decided from a military point of view by thesecond week of September

Just as the Schlieffen Plan was put into action by the Imperial General Staff (in an arguably fatallymodified form) during the last days of July and first days of August 1914, so the men who ran theReichsbank set in motion the modifications of the banking and currency system that would make itpossible, they hoped, for Germany to survive the breakdown of the hitherto extremely open globaleconomy for long enough to win the war

The first part of this financial plan of campaign involved abandoning the gold standard.

For decades, the routine convertibility of Germany’s paper currency – two-thirds of the money incirculation by July 1914 – into solid gold (or silver) coinage had meant that notes were not money inthemselves but, because exchangeable, represented real and constant (precious metal) value And,indeed, the amount of paper money issued could, by law, never exceed two-thirds of the money incirculation The remaining one-third had to be backed directly by gold This was the promise, so thetheory went, that for the previous forty years had kept the value of the German currency, like those ofother major countries before 1914, concrete and graspable

Exactly why the Reichsbank’s drastic step away from the gold standard was necessary would havebeen clear to any interested observer who, as Europe teetered on the edge of war, had foundthemselves at No 34–38 Jägerstrasse Here, hard by the historic Gendarmenmarkt in the heart ofBerlin, stood the Reichsbank’s imposing neo-classical head offices Concerned citizens, alarmed bythe headlines in the newspapers during the first part of July, had begun to form lines at the doors ofthe country’s private banks, and finally at the Reichsbank itself, which was also a retail bank, though

a very privileged and special one The threat of war had revived old anxieties about paper money,inspired a desire for the tangible, the immutable They wanted to exchange their mark notes for goldand silver coins, those ancient, reliable stores of value

With war on the near horizon, Hans Peter Hanssen, a member of the German Reichstag, finished ameal in a Berlin restaurant He offered the waiter a hundred-mark note in payment The waiter refused

it Everyone, he said, seemed to be paying in notes and wanting coins in return The next day, inanother restaurant, Hanssen tried to pay with a twenty-mark note The waiter, like his colleague theprevious day, was displeased, but went off to look for change He came back fifteen minutes later,empty-handed The restaurant had run out of coins Hanssen was forced to ask for credit.1

Despite attempts by the government-guided press to convince them of the solidity of the everydaycurrency, many Germans suddenly didn’t trust paper any more They wanted the security of the goldthat the currency was alleged to represent In the first weeks of July, around 163 million gold marks*

were redeemed from German banks and stuffed under the nation’s collective mattress.2

On Friday 31 July 1914, the doors of the Reichsbank were closed (private banks had alreadystopped exchanging currency for gold three days earlier) and they did not reopen until the followingTuesday – by which time there was no point in demanding gold for your paper money, because thebank would not give you any On 4 August a raft of emergency currency and financial laws formallydeclared the convertibility on demand of paper money to gold suspended for the duration of theconflict It was at this point, actually, that the term ‘gold mark’ came into usage, referring to the actualgold coin worth, by metal weight, either five, ten or twenty marks There were also one-, two-, three-and five-mark coins struck from 900/1000 silver, and their convertibility was suspended as well.After all, until then all notes had been convertible, merely representing a gold value, so there wereonly ‘marks’

Paper currency – fiat money, it has often been called – now rapidly became the only currency incirculation Gold coins, from now on, were either hoarded by individuals, therefore being removedfrom circulation, or became the property of the government, which was from the start keen topersuade an often reluctant populace to hand over whatever gold it still had, whether in the form ofmoney or valuables Gold represented, to the German government, something they could trade

internationally, for precious militarily important minerals and products that had to be purchased

abroad Most important of all, under the Loan Bureau Law (Darlehenskassengesetz) that had also

been included among the 4 August measures, the more gold the government had in its vaults, the morepaper money it could issue while still maintaining the all-important appearance of a gold-backedcurrency

The problem was that, although the Reichsbank knew that 5 billion gold marks were in circulation

at the outbreak of war, even by the end of 1914, after several months of an intensive propagandacampaign to persuade citizens to exchange gold for paper (‘gold for the Fatherland!’), it held only 2billion of that total Although all over the country patriots had obediently given up their gold andsilver coins, many other Germans – especially in rural areas – proved immune to patrioticblandishments They held on to the value they knew they could rely on, whatever the outcome of thedeveloping European catastrophe Somewhere, a lot of gold and silver was being hoarded

By 1915, the military conflict had settled into a bloody stalemate German and Allied forces facedeach other in the west across no-man’s-land, each huddled into networks of trenches running 700kilometres from the Belgian coast to the Swiss border Germany had not triumphed, as so many of herpeople had expected, but she remained well placed She controlled all but a tiny strip of Belgianterritory The great cities of Brussels, Antwerp (the port captured in October after a costly siegelasting more than three months) and historic Bruges, and the country’s rich industrial and coal miningarea including Charleroi, Namur and Liège, all lay in German hands The same went for much ofnorthern France, including the major textile-producing city of Lille with a pre-war population of half

a million, which finally fell to the Germans in October after vicious to-and-fro fighting

Although Paris was saved by the ‘Miracle of the Marne’, by the end of 1914 ten of the French

Republic’s eighty-seven départements lay entirely or partly under German occupation The more than

14,000 square miles of territory that for almost four years would remain behind the German linesincluded more than half of French coal mines, two-thirds of her textile manufacturing and 55 per cent

of metallurgical production; altogether 20 per cent of the country’s gross domestic product.3 In short,France’s industrial heartland lay for most of the war in enemy hands Although almost 2 million of thelocal population fled the German advance, that still left 2.25 million French citizens under anoccupation that was to prove bleak, lonely and harsh – sometimes brutally so.4

On the Eastern Front, after a brief Russian thrust into East Prussia in August 1914 was repulsed atthe Battle of Tannenberg, Germany stabilised the general situation, regrouped, and after the war’sfirst winter began a slow but inexorable advance into the Baltic countries and Russian Poland Most

of the latter, including Warsaw, its capital, was conquered in the course of 1915

While from a military point of view, at this stage of the war and for a long time to come, Germanystill held many advantages, her financial outlook was not nearly so positive So desperate did thegovernment become to separate its citizens from their hoarded gold that schoolchildren were enlistedinto the campaign to cajole adult family members, neighbours and acquaintances to the ‘gold exchangebureaux’, where helpful officials waited to relieve them of their all-too-solid wealth and swap it forpaper One propaganda pamphlet, ‘The Gold Seekers’, was aimed at children via their teachers It

told the fictional story of three teenage high-school (Gymnasium) students and their campaign to get a

well-off local grain merchant, Herr Lehmann, to part with his gold hoard for the country’s good, sothat paper money could be printed for the war effort on the back of the exchange It went without

saying that they would accuse him of being a ‘betrayer of the fatherland’ if he refused to do so.

Initially, Herr Lehmann was shown as resisting their pressure, and expressing scepticism that theReichsbank would adhere to its side of the bargain by only printing paper money that was covered bythe acquisition of gold such as his After all, he craftily reminded them, though the law might preventthis at the moment, the law could be changed But the imaginary youngsters were also prepared to dobattle against Herr Lehmann’s financial arguments One of them finally asked Lehmann if he wouldlend his own money to someone without the resources to repay him, even at a high interest rate Whenthe merchant said no, of course not, the young propagandist swooped:

Why does everyone take paper as readily as gold, although, for example, even a thousand mark bill is nothing more than a scrap of paper? Because he knows that the Reichsbank is in a position to give gold for it at any moment, because he knows he can count on the Reich What would happen if the Reich began to print notes without paying attention to its gold stock? It would immediately suffer

a loss of confidence The notes would no longer be accepted, especially abroad, or if accepted, then it would be like those profiteers who supply 750 marks of goods for the 1000 marks you pay them A mark would only be worth 75 pfennig abroad or, as one would say, the mark has a low value (exchange rate) 5

The words put into the precocious boy’s mouth were meant to sound convincing and, according to thepropaganda playbook, they finally convinced Herr Lehmann, too The last bit about the Reich’strustworthiness, the bit about how the Kaiser and his Reichsbank would never do anything thatendangered the soundness of the currency and the welfare of ordinary Germans, must have done thetrick Unfortunately, it was precisely this part of the argument that was – let us not mince words – alie

The fact was that under the Loan Bureau Law of 4 August 1914, the Reichsbank was no longer, inpractical terms, limited in its ability to print paper money by the amount of gold it held in its vaults.The Loan Bureau Law relieved the Reichsbank of the duty to provide credits to the individualGerman states and communities, as it would normally have done before the war In place of thesecredits, the law set up a system of ‘loan bureaux’ – to be found, as it happened, in local branches oroffices of the Reichsbank – which would provide nominally three-month (but in reality infinitelyrenewable) credits to these states and communities, backed by guarantees of either goods orsecurities These acceptable securities included Treasury bills issued by the German states, some ofthem very small, and also, crucially, war bonds

So far, so innocuous seeming But there was a hook concealed within the stipulations of this called Loan Bureau Law The Loan Bureaux were entitled to issue bureau notes These bills, which,though not fully legal tender, had the status of currency, were almost universally accepted as such, andrapidly passed into general circulation alongside regular paper money issued by the Reichsbank Thenotes would also, inevitably, fall into the hands of the Reichsbank And when they did, unlike thevarious other quasi-official bills in circulation, under the Loan Bureau Law they acquired the status ofproper money, or as the technical term goes, specie They became capable, like gold coins held by theReichsbank, of being used to generate three times their value in normal paper money So, for instance,there was nothing to stop a state or community using war bonds as security to acquire loan bureaunotes, which could then be used to buy more war bonds from the Reichsbank, which could then beused as security to buy more loan bureau notes and so on And each time, the Reichsbank wouldincrease its ability to print money that could be funnelled into the war effort

so-Admittedly, the law of 4 August limited the issue of loan bureau notes to 1.5 billion, but threemonths later, in November 1914, the ceiling was doubled to 3 billion to coincide with the first war

bond drive From then on, the ceiling was regularly raised By the end of 1918, loan bureau noteswith face value of a little over 15.5 billion marks were in circulation More than a third of these wereheld by the Reichsbank, which could therefore legally print 15.7 billion fully legally valid marks onthe base of this ‘security’, while still keeping up the façade of ‘sound’ money Several Germaneconomists realised this and tried to protest At least one had his article suppressed (written forpublication in January 1915, it was not published until the war was over in order to ‘protect thepublic’), while another was told by the Reichsbank’s grandees that if he did not desist, they would beforced to ‘seek the assistance of the military authorities’.6

Herr Lehmann was therefore right in his first arguments, and wrong to have let those pesky kidspersuade him to change his mind and exchange his gold for paper Although a fictional charactercreated for propaganda purposes by a writer doing the bidding of a government desperate for thewherewithal to wage war, the irascible old grain merchant represented millions of real Germans.They, too, would succumb to the blandishments of the official pamphleteers, the tub-thumpingpoliticians and the patriotic press, not to mention the sellers of war bonds They would give awaytheir solid wealth in exchange for a mess of paper, so that Germany might triumph

Within a few years, they would feel betrayed Their patriotic pride would turn to anger; a release anger that would fertilise a post-war harvest of intolerance and totalitarianism

slow-Footnotes

* Roughly a billion and a half euros at 2011 values.

2 Loser Pays All

The civilian populations of all the countries involved in the First World War experienced hardship.There were shortages and anxieties, even for those not occupied by the enemy or living close to thefighting zones All the millions of men who fought – and in huge numbers died – in the war hadfriends, families, relatives, many of whose waking (and perhaps also their dreaming) hours werefilled with apprehension on their behalf However, especially in Germany and Austria-Hungary, thephysical conditions under which civilians lived on the home front while their menfolk fought and died

in the trenches and battlefields far away were not merely difficult or austere; hunger stalked Europefrom the Rhine to the Vistula, from the Skagerrak to the Danube

On 1 August 1914, when Britain’s entry into the war was not yet certain, the German shipping

journal Hansa had predicted that if she did join in on the side of Serbia, France and Russia,

‘economic life [would] suffer a collapse unprecedented in history’.1 The author of that judgement wasproved right within a matter of months Despite the huge sums that Germany had spent on building upits naval strength, the Reich did not have the surface ships to challenge the Royal Navy and thus tomake the trading routes safe for German imports and exports during wartime

During the first months of the war, the British slowly tightened the screws on German trade by aseries of restrictive measures, though these stopped short of a total, indiscriminate blockade When,however, it became clear that the war was not going to be decided on the battlefield any time soon,the cabinet in London decided to step beyond the accepted rules of conflict Exploiting the Germans’declared intention in February 1915 to wage unrestricted submarine warfare against Entente shipping

in the North Sea, the British initiated a total ban on imports and exports of all kinds, to and from theterritories of the Central Powers, including food and other goods entering via neutral territories such

as Holland and the Scandinavian countries The measures were to be rigorously enforced by theEntente’s navies On 1 March 1915, a British Order in Council declared ‘the British and Frenchgovernments will hold themselves free to detain and take into port ships carrying goods of presumedenemy destination, ownership or origin’.2 For the remaining duration of the war, and for the months ofarmistice that followed, German overseas trade was confined to the Baltic and to occasional foraysinto the North Sea

The Reich’s enemies knew perfectly well that before the war Germany had needed to import largequantities of food to supply her population It became clear that the Entente’s (and especiallyBritain’s) intention was to bring about Germany’s defeat at least in part by a policy of deliberatestarvation The German civilian population was quite specifically targeted As Britain’s most seniordefence official, Maurice (later Lord) Hankey, asserted in a confidential memorandum from thesummer of 1915, ‘Although we cannot hope to starve Germany out this year, the possibility that wemay be able to do so next year cannot be dismissed ’3

That the Entente blockade killed large numbers of Germans directly or indirectly, there can be littledoubt The suffering increased as the years went on It was estimated that in 1915 some 88,000German civilians died of causes attributable to the blockade, and in 1916 around 121,000 The

months straddling 1916-17 were known as the ‘turnip winter’, because of the lack of protein andother vital foodstuffs available to the German population – especially in the country’s cities By theend of the war the total number of victims was thought to have reached more than 760,000.4

In the city of Düsseldorf, in the northern Rhineland – its adult population a mix of white-collarofficials and industrial workers – staples such as potatoes were often unavailable for months at atime

In 1916, the shortage of fats began in earnest Legumes such as lentils, barley and peas wereavailable only rarely or not at all By 1917, ‘war coffee’, which contained no real coffee at all, wasthe only kind for sale The city officially allotted one egg to each adult every three weeks, but did notalways have them to distribute All kinds of cheese were scarce; dried fruit was not to be found Theonly type of food available steadily in Düsseldorf was vegetables, and the kind and quantitydepended on the season.5

By 1917 the diet of the average industrial worker in Düsseldorf compared very unfavourably, asregards both quantity and diversity, with that provided to an adult male in the pre-war poorhouse inthe city of Hamburg.6

Germany’s inability to trade meaningfully also reflected her inability to participate in what was left

of the global financial system Britain and France could continue, to some extent, to import andexport, and to raise money for the war through borrowing on the international markets In the fouryears between 1914 and 1918, Britain earned £2.4 billion from shipping and other ‘invisible’sources, sold £236 million of its foreign investments, and borrowed almost £1.3 billion abroad.7

Before August 1914, Germany had held overseas investments of between £980 million and £1,370million in countries with which she later found herself at war At least 60 per cent of these weresubjected to outright confiscation.8 Moreover, unlike Germany, Britain and France remained inpossession of large overseas empires This meant that they could also make good any shortfalls indomestic food supplies, as well as calling on vast extra material resources and manpower

After the failure of early attempts by Germany to raise funds on the New York financial markets, itbecame clear that by contrast the Reich stood alone Again, though Britain also had to raise vast sums

of money for the war, the capacity (and willingness) of the City of London, the world’s greatestfinancial centre, to absorb far greater quantities of short-term ‘floating’ debt than the comparativelytiny German money market, gave it a vital advantage, in particular lessening the inflationary effect ofsuch borrowing on the general economy.9

True, Germany managed to raise £147 million through sales of foreign securities All the same, thevast majority of any money required to cover the immense cost of waging war on such a scale, and forthe kind of duration now expected, would have to be raised from among Germany’s own citizens byvarious means, including the sales of long-term interest-bearing war bonds, as well as increases inexisting taxes and the levying of new ones This created a burden of debt that would haunt the countryfor many years to come There was also, as we shall see, the hidden time bomb of the vast loans takenout by Germany’s municipalities to cover their wartime expenses, which, since German law devolvedsuch responsibilities, included vastly increased welfare expenditure for victims of the fighting, theirfamilies and dependants

It was a daunting prospect But Germany’s rulers – and most of the country’s citizens – expectedthat such outlay, however burdensome, would be merely temporary When the Reich finally won thewar, so the nation assumed, these expenses would be recouped from the losers – Britain, France,

Russia and their allies On 20 August 1915, the conservative-nationalist Secretary of State for theTreasury, former chair of the board of the Deutsche Bank and later Reich Vice-Chancellor, Dr KarlHelfferich, openly declared as much to an enthusiastic Reichstag:

Gentlemen, as things stand, our only way through remains to postpone the final regulation of war costs through the means of credit, to

a future time when peace is concluded, until we are at peace And on this subject I should today like once more to emphasise this: If God grants us victory and thus the possibility of shaping the peace according to our needs and the necessities of our national life, we intend and are entitled, along with everything else, not to forget the question of costs.

[Lively agreement]

We owe this to the future of our people.

[Calls of ‘very true!’]

The entire future maintenance of our life as a nation must, insofar as is at all possible, remain free of, and be relieved of, the enormous burden that the war has caused to accumulate.

[Further calls of ‘very true!’]

It is the instigators of this war who deserve to bear this lead weight of billions.

[Calls of ‘quite right!’]

Let them drag it through the decades to come, not us.

[Calls of ‘very good!’] 10

Of course, Germany’s enemies believed exactly the same In the case of France and Belgium, theyalso fully intended to seek compensation for physical damage inflicted on their territory as a result offighting, and the activities of German occupation forces

This last imposition, should Germany in fact lose the war, was going to be extremely onerous.Except for a brief though violent Russian incursion into the easternmost part of Germany in the firstweeks of the war, and some fighting in the border fringes of Alsace and Lorraine, the Reich’sterritory remained untouched by war to the end

In France, by contrast, as a result of the fighting and the occupation, more than half a million privatedwellings and 17,600 public buildings were reckoned completely or largely destroyed; 860,400acres of farmland were laid waste or rendered unsuitable for cultivation; and 20,000 factories andworkshops were destroyed or seriously damaged Some factories, especially those containing modernmachinery, were dismantled and shipped to Germany At least a million head of cattle were alsotransferred east of the Rhine

Most appallingly, when the Germans ‘rationalised’ their front and fell back to the supposedlyimpregnable ‘Hindenburg Line’ early in 1917, at some points retreating up to fifty kilometres, theycarried out a ruthless, systematic policy of destruction Demolition teams obliterated all industrialplant, farms and infrastructure before abandoning the territory the Imperial Army had occupied forjust over two and a half years Coal pits were dynamited and flooded The local civilian population

of around 125,000 was forcibly evacuated The area was sown with mines and public buildingsbooby-trapped

It is not so surprising that estimates of the total monetary cost to France of the fighting andoccupation ran to between 35 billion pre-war gold francs ($7 billion) and 55 billion gold francs ($11billion).11

In Belgium the country’s population and its industries suffered even worse abuse Factories weresubjected to massive requisitions or, if seen as post-war competition for German industries, closed orallowed to decay Many were totally demolished Machinery was commandeered and sent toGermany The country lost 6 per cent of its housing stock and two-thirds of its railway tracks Onehundred and twenty thousand Belgian workers, many robbed of their employment by factory and mine

closures, were deported to Germany and used as forced labour.12

All this happened with the approval not just of the Kaiser and his commanders, but of many Germanpoliticians and industrialists As early as September 1914, Chancellor Theobald von Bethmann-Hollweg had circulated a discussion paper written by an aide that envisaged outright annexation ofextensive areas of Belgium and north-eastern France, turning the remains of Belgium into a vassalstate and effectively crushing France as a military and economic threat to Germany once and for all Itwas effectively a ‘shopping list’ of maximum demands rather than a formal policy document, butnevertheless showed the extent of ambition within German elite circles

It is hard to see the paper as anything other than a blueprint for a German Europe:

The general aim of the war is security for the German Reich in west and east for all imaginable time For this purpose France must be

so weakened as to make her revival as a great power impossible for all time Russia must be thrust back as far as possible from Germany’s eastern frontier and her domination over the non-Russian vassal peoples broken.

France.

The military to decide whether we should demand ceding of Belfort and western slopes of the Vosges, razing of fortresses and ceding

of coastal strip from Dunkirk to Boulogne.

The ore-field of Briey, which is necessary for the supply of ore for our industry, to be ceded inany case Further, a war indemnity, to be paid in instalments; it must be high enough to preventFrance from spending any considerable sums on armaments in the next 15-20 years

Furthermore: a commercial treaty which makes France economically dependent on Germany,secures the French market for our exports and makes it possible to exclude British commerce fromFrance This treaty must secure for us financial and industrial freedom of movement in France insuch fashion that German enterprises can no longer receive different treatment from French

Belgium

Liège and Verviers to be attached to Prussia, a frontier strip of the province of Luxemburg to Luxemburg.

Question whether Antwerp, with a corridor to Liège, should also be annexed remains open

At any rate Belgium, even if allowed to continue to exist as a state, must be reduced to a vassalstate, must allow us to occupy any militarily important ports, must place her coast at our disposal inmilitary respects, must become economically a German province Given such a solution, whichoffers the advantages of annexation without its inescapable domestic political disadvantages,French Flanders with Dunkirk, Calais and Boulogne, where most of the population is Flemish, canwithout danger be attached to this unaltered Belgium The competent quarters will have to judge themilitary value of this position against England

The question of colonial acquisitions, where the first aim is the creation of a continuous Central African colonial empire, will be considered later, as will that of the aims to be realised vis-à-vis Russia.

A short provisional formula suitable for a possible preliminary peace to be found for a basis for the economic agreements to be concluded with France and Belgium.

Holland.

It will have to be considered by what means and methods Holland can be brought into closer relationship with the German Empire.

In view of the Dutch character, this closer relationship must leave them free of any feeling ofcompulsion, must alter nothing in the Dutch way of life, and must also subject them to no newmilitary obligations Holland, then, must be left independent in externals, but be made internallydependent on us Possibly one might consider an offensive and defensive alliance, to cover thecolonies; in any case a close customs association, perhaps the cession of Antwerp to Holland inreturn for the right to keep a German garrison in the fortress of Antwerp and at the mouth of theScheldt.13

Even as a summary of daydreams experienced during a time of euphoria – the Germany army was stilladvancing on the Marne, with Paris in its sights – the memorandum is a drastic piece of work Itcannot be asserted that this amounted to a firm policy – historians have been arguing about this issuesince the document was discovered in the 1950s in an East German archive – but it seemsunquestionable that according to these lights, if she won, Germany planned to exercise dominance inEurope Ruthlessly so

Admittedly, on the other side, agreements were also being made as the war went on which, tomodern sensibilities, appear monstrously unjust and high-handed There was the secret treaty betweenthe Entente powers awarding Imperial Russia control over the Dardanelles and Constantinople (nowIstanbul) after victory Another set of secret agreements, under which Italy entered the war on theEntente side, promised Rome substantial chunks of Austria and the Aegean islands as well as Germancolonies Finally, there was the breathtaking hypocrisy of the so-called Sykes–Picot Agreement,which, even as the Entente encouraged Arabs to raise the standard of rebellion against their Turkishoverlords, proposed to divide up the Arabic-speaking Middle East (Syria, Lebanon, Palestine, Iraq)between Britain and France Though concealed beneath slogans of peaceful development anddemocracy, this amounted to a new, even more toxic final bout of opportunistic imperialist expansion,one for which our world is still paying a heavy price

Bethmann-Hollweg’s ‘September Programme’ was a radical proposal, but by no means the mostextreme of the plans being floated around quite respectable mainstream political circles in the Reichduring the course of the war These also included large-scale annexations in western Russia and theBaltic lands as well as even more sweeping losses for France and Belgium.14 The peculiarity of thediscussion within Germany, however, rested in the participants’ blatant assumption of the absoluteand permanent dominance in Europe that would follow victory Everyone from government figures,industrialists and extreme nationalists – sometimes all three functions were combined withinindividual human beings – discussed such plans for boundless supremacy of German political,military and economic interests as if they were natural and right

The purpose of detailing all this is not to apportion blame – though that would all too soon become

a game everyone would play and which continues in historical circles to this day – but, rather, toshow that all the countries involved in the war knew that they couldn’t afford to pay for their folly.The losers would have to do that

On the German side, the chief way of ensuring that the country recovered quickly after the hoped-for

victory was to put the Reich in a situation of such crushing superiority that it could do, and take, what

it wanted And then came the question of compensation As Helfferich had put it in his famous speech

on the 1915 budget, it was ‘the instigators of this war who would have to bear this lead weight ofbillions’ And he had been right It just depended who, when the savage music of mass slaughterstopped, was going to be found sitting in the chair marked ‘instigator’

A reparations bill of 5 million gold francs – amounting at the time to 25 per cent of the defeatedcountry’s annual gross domestic product – had been imposed by Bismarck on the French in 1871.This huge windfall to the Reich’s economy was said to have helped fuel the near-disastrous boom thatfollowed German unification The 1871 imposition was not to make restitution for damage toGermany No fighting had taken place on German soil Again, in the First World War, any reparationsdemanded by Germany would not have been for devastation of the Reich’s territory, resources orinfrastructure, for (apart from a few early and fairly ineffectual aerial bombing raids and somefighting in German Alsace-Lorraine) there had been none So what would Germany have demanded?Enough to compensate her for the quite enormous cost of the war?

Some indication of how a victorious Germany might have treated the Entente in the war’s aftermathcame with the Treaty of Brest-Litovsk, signed early in 1918

Imperial Russia’s huge but mediocre and often poorly led army had been slowly pushed back out ofPoland and most of the Baltic lands and into what is now Ukraine and Belarus There had been sometemporary Russian successes The so-called Brusilov Offensive in the summer of 1916, named afterthe general who planned and launched it, had at great cost forced the Austro-Hungarian forces toabandon their early gains Nevertheless, the story of Russia’s participation in the war became one ofineffectuality at the front and increasing political and social chaos at home

By February 1917, the British Military Attaché to the Russian army, Colonel Knox, sent hissuperiors in London a message on the situation there that augured disaster More than a millionRussian soldiers had been counted killed, and a further 2 million missing or taken prisoner Anothermillion had deserted ‘These men,’ Knox wrote, ‘were living quietly in their villages, unmolested bythe authorities, their presence concealed by the village communes, who profited by their labour.’15

In the course of February and March, sections of the Tsar’s army began to disobey orders and inRussia’s cities there were huge demonstrations against the war and the regime, followed by strikes inkey industries On 12 March, the soldiers of the 17,000-strong garrison in the capital, Petrograd,*

joined the demonstrators and the old regime’s days were numbered

The overthrow of the Tsar led to the establishment of a weak provisional government dominated bythe moderate left Committed to a democratic system, it nevertheless did little to change the situation

at home or at the front, except perhaps for the worse The radical ‘street’ and the newly establishedsoldiers’ committees wielded just as much power as the bureaucracy and its new reformist masters.Both the new republican government and the military command were forced to share power withunofficial, hastily elected ‘Soviets’ and their appointed commissars The death penalty for offencesagainst military discipline was abolished

In July 1917, an attempted assault by this hastily democratised Russian army on the Hungarian defences (named the ‘Kerensky Offensive’ after the socialist firebrand who had beenappointed Defence Minister in March) collapsed within a couple of weeks, turning into a full-scalerout accompanied once more by massive desertions The catastrophe brought German forces deepinto Russia proper, their capacity to advance at will hindered by little except problems of transport

German/Austro-and supply.

By early November (October under the old calendar still used in Russia, and hence alwayscelebrated as the ‘October Revolution’), a coup in Petrograd brought to power the far-left Bolshevikparty It was led by the brilliant Marxist theorist and agitator Vladimir Ilyich Lenin, whose passagefrom Swiss exile back to Russia during the summer had been arranged by the German authoritiesprecisely in order to facilitate Russia’s exit from the war

Sure enough, negotiations between the Bolsheviks – committed to ending the war and desperate toconsolidate their uncertain grip on power – and the representatives of the triumphant Central Powersled in December to an armistice on the Eastern Front Further negotiations soon stalled, however Therecently appointed Bolshevik Commissar for Foreign Affairs, Leon Trotsky, defied Lenin’s wishesand held out against the tough German and Austro-Hungarian demands – possibly in the hope that, ifthe war dragged on, discontent in the enemy countries, like that in Russia during the earlier part of theyear, might yet bring about revolutions in Berlin, Vienna and Budapest Finally, in February 1918,talks broke down The Germans and their allies resumed their all but unopposed advance into Russia,within just a couple of weeks of taking control of further huge areas of Ukraine and Belarus At onepoint, they managed to push forward 150 miles in a little over five days.16

On 3 March 1918, with the advancing Germans drawing close to Petrograd, the Bolshevikleadership at last agreed terms A treaty was signed at a ceremony in the imposing early nineteenth-century tsarist fortress of Brest-Litovsk, on the border between historic Poland and Russia, which hadbeen in German hands since August 1915 Leading the Bolshevik delegation was Trotsky’s deputy,Georgi Chicherin, a close ally of Lenin

So what price was the revolutionary clique in control of Petrograd prepared to pay? The cost ofpeace was, in fact, a lot worse than the one the Bolsheviks had rejected earlier in the winter The newMarxist Russia was forced to acknowledge the loss of Poland, the Baltic lands, plus Finland, Ukraineand Belarus Georgia became independent, and strategic parts of the Caucasus were ceded to Turkishcontrol

The areas forfeited contained a third of the former Russian Empire’s population, a third of itsarable land and nine-tenths of its coal mines At a stroke, the Bolsheviks abandoned virtually all theterritory Russia had gained since the eighteenth century, and their domain was reduced almost entirely

to the ancestral Russian-speaking lands Huge swathes of the Tsars’ Russia became effectively aGerman protectorate Although technically both sides renounced any claim on conventional warreparations, after further negotiations the Bolsheviks also agreed to pay a sum of 6 billion gold marks.This supposedly represented restitution for German property and businesses confiscated as a result ofwar and revolution, as well as the Bolsheviks’ default on pre-war tsarist bonds bought by Germaninvestors

With the Germans so uncomfortably close to Petrograd, a little more than a week after signing thetreaty the Bolsheviks moved their capital back to the relative safety of Moscow, which had been theseat of the Tsars until the time of Peter the Great The centre of gravity of the new revolutionaryrepublic switched therefore almost 400 miles inland and south-eastwards, away from the Baltic andthe occidental influences to which Peter the Great, Petrograd’s builder, had been so eager to exposehis subjects

As to how the Treaty of Brest-Litovsk was received in Germany itself, there was celebration amongthe extreme nationalists, who were delighted by the dramatic extension of German occupation and

control into territories long seen in such circles as ripe for incorporation into the Reich.17 Even thosewho understood the treaty for the brutal thing it was experienced a certain weary relief that, on onefront at least, the war had been brought to a victorious conclusion Almost everyone hoped thattriumph in the east might presage the breaking of the bloody stalemate in the west, to Germany’sadvantage.

There was universal hope that the commitment of the new, independent Ukraine, which had signed aseparate treaty with Germany, to supply the Reich with wheat would alleviate the now desperateshortage of bread The treaty was popularly known as the ‘bread peace’, even though, as things turnedout, disappointingly little of the grain from the fertile Ukrainian steppes ever found its way to theGerman civilian population before the fortunes of war and revolution made the treaty redundant.18

Romania was also brought to its knees that spring At the Treaty of Bucharest, signed in June 1918,Germany claimed Romania’s agricultural output and virtual ownership of the country’s crucial oilindustry This, too, was not a treaty to impress the world, and especially Germany’s vengefulenemies, with the Reich elite’s benign intentions

Footnotes

* Formerly St Petersburg, later Leningrad, now once again St Petersburg.

3 From Triumph to Disaster

Then, as now, the international financial world respected power By the time of the BolshevikRevolution, the mark had depreciated in the currency markets to a rate of 7.29 marks to the US dollar,

as opposed to 4.20 on the outbreak of war in 1914 Five months later, in March 1918, with thevictorious conclusion of the war on the Eastern Front giving apparent grounds for optimism, it hadclimbed to 5.11, the strongest level for almost three years

It may be that the firming up of the mark’s official value (to be distinguished from its informal orblack market rate, and, more importantly, from its actual domestic purchasing power) was the result

of renewed optimism in Germany and elsewhere about the country’s prospects in the war If so, what

it did not take into account was the fact that in other, perhaps less obvious, regards Germany’ssituation had actually become decidedly worse

A little less than two weeks before the Treaty of Brest-Litovsk was signed, American troops sawtheir first real action on the Western Front Two dozen of them joined a French raid on enemytrenches near Chevregny in Picardy German prisoners were taken.1 It was an unremarkable event initself, but the point was that these troops were among the million Americans who would join theAllied forces in France by July 1918 Moreover, even after July they were still arriving at the rate of10,000 a day

As Winston Churchill later wrote:

The impression made by this seemingly inexhaustible flood of gleaming youth in its first maturity of health and vigour was prodigious None were under twenty, and few over thirty As crammed in their lorries they clattered along the roads, singing the songs

of a new world at the tops of their voices, burning to reach the bloody field, the French Headquarters were thrilled with the impulse of new life 2

The contrast with the state of Germany’s population, soldiers and civilians alike, could not have beenmore stark

The spring of 1918 saw a rise in popular hopes that the war would finally turn in Germany’s favour.However, the situation for most of the Reich’s hard-working and long-suffering population remained

in almost all other ways dire

Although conditions were not quite as appalling as they had been during the ‘turnip winter’ of1916-17, food prices were moving ever higher – where food was available Rationing for basicfoodstuffs had begun in 1915 and was extended as the war went on, though even this did not guarantee

a decent diet for the population A ration system could hope to distribute food more fairly; it could not

of itself increase the amount available

The authorities, later acting in tandem with a network of ‘price examination agencies’ set up undergovernment decree, tried to enforce their own, varying interpretations of fair pricing in their owndistricts, and to combat profiteering and black marketeering This led to widespread withholding ofsupplies by hard-pressed farmers, who resented the restrictions, and in turn to large-scalerequisitions by the military authorities Towards the end of the war, the army even organised searches

of farms suspected of hoarding produce.3 Some military districts were less stringent in theirenforcement of price controls, and, like water running downhill, produce tended to find its way tothose areas.4

It was clear that Germany was turning into two countries: an urban Germany, dependent on foodimported from abroad or the countryside; and a rural Germany, which was self-sufficient andreluctant to release what it grew or reared unless the price was right The division would continuewell into the unhappy peace

Germany’s cities were not just suffering a crisis over food Amid desperate government attempts tocontrol rents, the housing shortage in the cities worsened steadily as the war went on The flood oflabour into areas containing large numbers of war factories put accommodation there at a particularpremium Ordinary Germans were also suffering from disastrous shortages of shoes, clothing, coaland soap The last problem affected miners and heavy-industrial workers especially seriously Thisled, shamefully for a people that took pride in its cleanliness, to an epidemic of lice.5

In fact, arguably it was mostly the renewed hope of military victory that kept the lid, for themoment, on popular discontent As the liberal German journalist and writer Sebastian Haffner (b.1907), then a schoolboy in Berlin and keen fan of the war, wrote twenty years later in a memoir of thetime:

Bad food – OK Later also too little food, clacking wooden soles on my shoes, threadbare suits, collecting bones and cherry stones * in school, and, curiously, frequent illness But I have to admit that all this made no deep impression on me I thought as little about food as the football enthusiast at the cup final thinks of food The daily Army Reports interested me much more than the dinner menu 6

Young Haffner was the son of a senior Prussian civil servant and at that time an enthusiastic, not tosay excitable, nationalist Unlike him, not everyone found patriotic fervour, or the thrill of the dailyArmy Reports, to be acceptable substitutes for a square meal Towards the end of January 1918, thepot threatened to boil over Four hundred thousand workers in Berlin had downed tools, partly inprotest at reductions in bread rations for heavy work, but more importantly also in support of a peacewithout annexations, an end to the militarisation of the factories, and democratic political reforms.These political strikes spread quickly to Kiel, Hamburg, Halle and Magdeburg before beingsuppressed with the aid of harsh measures that included conscription of many strikers into themilitary, and long prison sentences for ringleaders

The major industrial stoppages were over by the second week of February Between March andJuly, after the Treaty of Brest-Litovsk and while the drama on the Western Front was still beingplayed out with some prospect of success, there ensued a period of relative political and social calm

The ‘peace bonus’ from victory in the east, such as it was, had been meant to manifest itself in more(and more successful) war in the west The formal end of the war against Russia meant that a largeproportion of the German forces hitherto tied up there could be sent into action in the west In a matter

of weeks, hundreds of thousands of German troops and their equipment – including many gunscaptured from the Russians during the final German advance - were transferred from one front to theother

The Army High Command (OHL), and in particular its head, seventy-year-old Field MarshalHindenburg, and his deputy, Quartermaster-General and de facto commander-in-chief, General Erich

Ludendorff, had begun to exercise a virtual dictatorship over the country from 1916 onwards, albeitone disguised by a veneer of law and a not entirely compliant Reichstag With hundreds of thousands

of fresh American ‘doughboys’ pouring into France, and the USA mobilising its finances and itsindustries for war, the High Command knew that Germany would soon face a far stronger enemy thanbefore Best to strike the decisive blow now A great offensive in France had therefore been inpreparation for some months

On 21 March 1918, the High Command launched a massive attack on the British 5th Army TheGerman planners had chosen a perceived weak point of the enemy front, the hinge between the Britishand French forces, near St Quentin on the Somme Preceded by the most massive artillerybombardment of the war – involving 6,000 heavy guns and 3,000 mortars – and assisted by extremelyfoggy conditions on the ground, elite German ‘storm-troop’ units punched holes in the enemy lines andforced the British back

The German offensive gained four and a half miles in a day and took 21,000 British prisoners.Within two days, they had reached the key barrier of the Somme River, and by dawn on 23 Marchthree giant guns specially manufactured by Krupp were in position and bombarding Paris, which wasnow only seventy-four miles distant Two hundred and fifty-six Parisians were killed in a singlemorning The Kaiser declared ‘the battle won, the English totally defeated’ The next day, theGermans crossed the Somme and began to advance on Paris itself.7

There were further gains over the following weeks, here and elsewhere on the long front line, and

on a map the bulge created by the German offensive looked impressive But the ‘English’ were notdefeated Nor were the French or the Americans As spring turned to summer, there were no morequick, dramatic advances The German army found itself short of reserves and having to man a muchlonger, less easily defensible line than the one they had occupied in March, before the offensivebegan.8 In fact, the strength of the German field army fell between March and July from 5.1 million to4.2 million – many of the casualties its best, most experienced soldiers9 – just at the same time as theEntente forces were being strengthened by a total of 2 million fresh Americans Certain categories oflight artillery and flame-throwers had their production quotas reduced because there were simply notenough trained fighting men at the front available to use the quantities being shipped from Germany’sfactories.10

The German thrust was eventually held in mid-July 1918, sixty miles or so north-east of Paris Forthe first time, American troops, fighting around Château-Thierry, played a decisive role Within amatter of weeks, the enemy had begun to advance once more, and German troops were forced into aretreat that would end only with the Reich’s plea for an armistice little more than a hundred dayslater

The collapse of the final, desperate German offensive in the west accentuated the growing social andpolitical polarisation in the Reich In 1914, almost the entire German political spectrum (with a few

exceptions on the far left) had united in a so-called Burgfrieden (literally ‘fortress peace’), or

wartime truce Something similar occurred in France, where the Prime Minister of the time dubbed it

the union sacrée (‘sacred union’).

Immediately following the outbreak of the war, only one Social Democrat Reichstag deputy, KarlLiebknecht, had voted against war credits By the next year, Liebknecht was no longer alone Withintwo years the Social Democratic Party (SPD) had split down the middle, and the anti-war left

mushroomed as the bloody struggle continued, seemingly without sense or end By the third and fourthyears of the war, although the large majority of Germans of all classes remained committed to victory,

a substantial proportion of the population, including socialist, Catholic and liberal Reichstagdeputies, had turned in favour of either a negotiated compromise peace or even peace at any price InJuly 1917 a majority of the Reichstag, in a telling act of defiance which showed how far the splitwithin the nation had widened, ignored pleas from the government and the High Command and passed

a resolution calling, albeit in ringing patriotic phrases, for just such a negotiated peace withoutannexations on either side

In reaction to the Peace Resolution, on 2 September 1917 the nationalist and radical right,supported behind the scenes by the political soldiers within the High Command, created anorganisation devoted to uniting all groups and individuals in Germany committed to conquest,annexations and a fight to the bitter end Called the ‘Fatherland Party’ (Vaterlandspartei), by July

1918 it could claim a million and a quarter members.11 This figure, if accurate, gave it a biggermembership than the Social Democratic Party, hitherto the largest political grouping in the country.However, it is questionable whether the Fatherland Party was really a ‘party’ at all – any more than,under the Obama administration of the present century, America’s ‘Tea Party’ is a political party –but actually a pressure group, albeit a very impressive one during its heyday.12

The war had been a disaster for most of the population in Germany, as it had in every countryinvolved except America The polarisation within the Reich reflected the different situations ofdifferent sections of society Those industrialists involved in supplying arms and equipment for thewar effort had done well – in some cases spectacularly so, with some large firms achieving dramaticgrowth Others, especially in consumer goods and services, had suffered disastrous declines inproduction and profits By 1918, for instance, the number of males employed in the textile industrywas only a quarter of what it had been in 1913, with even the female workforce only three-fifths of itspre-war strength Numbers in the building industry had more than halved.13

Overall, taken throughout the war years, industrial production in Germany had declined by between

a quarter and a third, more than that of any of the Entente powers

Indices of industrial production (1914 = 100)14

Germany Britain Russia Italy

The wine and tobacco harvests proved bumper ones, but other food products suffered badly.Production of beer in Germany, for instance, was reduced by two-thirds in the course of the war.Agriculture in general was hit by severe manpower shortages (the army took no account of the crucialnature of food production when scouring the countryside for recruits) and shortages of importedfertilisers due to the British blockade Production of wheat was halved.16 The shipping industry, hit

by the slump in trade and the Entente blockade, with many of its vessels either marooned in neutralports or seized by the enemy, virtually collapsed Forty-four per cent of the pre-war merchant fleethad been either sunk or confiscated.17

Like the owners of defence-related companies, many workers in the war industries had donerelatively well, and a few splendidly Between 1914 and 1918, the daily wages of male workers inwar-related industries increased by 152 per cent, and those of females – with millions of men at thefront, a group whose participation in the labour market increased dramatically during the war years –

by 186 per cent, while the figures for the non-war sector were 82 and 102 per cent respectively.Skilled workers in high demand within certain sectors of war production experienced even higherincreases There was discontent among less well-paid workers at the ability of these privilegedlabour groups – especially if the husband and wife were both employed – to buy scarce goods on theblack and grey markets, to invest in war bonds and maintain bank accounts and live a life resembling

in some ways that of the pre-war middle class.18 This type of worker, certain to attract snobbishdisapproval, was not, however, typical, any more than was the blatant war-profiteering capitalist.The problem was that both groups existed in sufficient numbers to cause a generalised resentmentamong their fellow Germans

Most industrial workers – especially those in the non-essential service and consumer sectors – sawtheir real earnings eroded by price inflation during the war Calculations of price inflation arecomplicated, but, all in all, the cost of living seems to have roughly trebled during the course of thewar.19 So, while the external exchange rate of the German mark might have recovered quite a lot in

1918, its actual internal purchasing power – reflecting the real inflation of prices, on the ground, forordinary people – had declined much more drastically In Hanover in the summer of 1918, a woman’sweekly wage bought two kilos of butter.20 By the end of that year, the mark had lost around three-quarters of its 1913 value ‘In other words,’ as one historian of the First World War put it, ‘most ofthe deterioration of pre-war money savings had already occurred by the Armistice, well beforebillions of marks were needed to post a letter or buy an egg.’21

All the same, those producing in factories and workshops for the war effort were on the wholebetter placed to minimise the damage to their living standards Labour shortages and the essentialnature of their work meant that the authorities, eager to maximise war production at all costs, wereprepared to indulge their demands for better wages

The old middle classes found themselves in a very different situation Widely seen as the pillars ofsociety before 1914, these were the Germans who suffered most from the war and its economicpressures The differences in earnings between working- and middle-class Germans were reducedduring the war, not so much because the industrial workers became dramatically richer – a commonmyth based on a few exceptional cases – but because their ‘betters’ became, with few exceptions,altogether poorer

The lower ranks of officialdom, previously used to relatively modest rates of pay, with their realcompensation taking the form of social status and job security, also felt themselves under wartime

conditions to be – and they were – underpaid and overworked There were cost-of-living adjustments

in their salaries from time to time, but these never covered the constant, unpredictable real priceincreases Their standard of living fell sharply during the war years and their resentment becamepalpable In 1914, a civil servant’s income in real terms had been on average five times that of amanual worker By 1918, it was only three times greater, a drastic, not to say traumatic, drop incomparative living standards in a very short time

The Deputy Commander of the Frankfurt military district painted a gloomy picture of these collar workers’ plight in a report filed in October 1917:

white- white- white- all those living on fixed salaries are facing a change of social position; they are slipping from the level upon which they have stood and are approaching the level of those who find it necessary to live from hand to mouth This social decline of the officialdom contains

a not-to-be-underestimated danger to the state and society Previously the officials could be counted among those who stood for the regulation of working conditions without great economic conflicts The state and the communities must guard against letting the officials feel that they are being given up to the storms of economic developments without protection.

The same went for white-collar staff in industry, who, unlike their manual co-workers, wereunwilling to compromise their hard-won and precious social standing by going on strike for higherwages As for small businessmen and craftsmen, the backbone of the much-admired German

Mittelstand, many found their businesses shut down as inessential to the war effort, starved of raw

materials diverted to more vital sectors or simply bereft of customers.22 They represented millionsmore Germans subjected to dramatically reduced incomes and loss of status – and accordingly ripe toblame those seen as profiteering

Again, the one thing that could be seen by such victims of the war economy as providing possiblerecompense for their suffering – and even enabling restoration of their previous way of life – was thepromise of victory For the first half of 1918, with Russia knocked out of the war and the armyadvancing in France, this seemed to many Germans to have become inevitable Annexations or noannexations, with France and Britain defeated, Germany would perforce dominate Europeeconomically and politically as well as militarily She would be even more prosperous than before.There would be enough to eat, and the necessities of life would be once more plentiful andaffordable Normal economic conditions would return, bringing with them a strong German markbased once more on the gold standard Stable prices would nurture the rebirth of a stable society

Nurtured by endless, triumphant daily press reports, these happy hopes lasted, for most ordinaryGermans, until July 1918, when reality bit with a vengeance In August, another report from a militarycommandant admitted the negative effect the renewed German reverses were having on morale athome:

The joyous – partially exaggerated – hopes which were attached to the renewal of our offensive have been strongly shaken by the enemy counterattack and the withdrawal on our front While the great mass of the people, because of the successes during the spring, have become accustomed to counting on the ending of the war this year, the prospect of another war winter has created a certain dullness and indifference in many people, and the economic cares and privations have come to the forefront again more than before 23

Following the British counter-attack near Amiens on 8 August, spearheaded by tanks, 70 per cent ofGerman losses were in the form of men taken prisoner, rather than wounded or killed, a sure sign thatmorale among the front-line soldiers was starting to collapse.24 By late October, the German front linehad been pushed back more than fifty miles A liberating British Army had been welcomed by

delirious crowds in Lille on 28 October, and many other major towns were also taken back intoFrench control.

The military fate of Germany was all but decided Though her armies had still not been put to flight,

a sense of hopelessness was spreading both at the front and at home Clearly, there would be no moreadvances, and certainly no victory of the all-conquering kind so many had imagined just a month ortwo previously

In the final weeks of the war, the prospect of defeat also drastically changed the shape ofGermany’s political life Attempts by the Reich’s elite, above all the High Command, to stem theswelling tide of discontent led to a drastic change of policy On his generals’ advice, the Kaiserreluctantly assented to a brief, quasi-democratic interlude A new cabinet was formed under therelatively liberal Prince Max of Baden, and at the end of October the right to name a chancellor wastransferred from the monarch to the Reichstag No one seemed to grasp the irony of offering theGerman people democracy under yet another prince It couldn’t last The angry masses began to take

to the streets and demand far more radical changes than the Berlin establishment could, or wanted to,concede Sporadic rioting and fighting began

Bizarrely, the life of the city, and that of its elite, went on On 8 November 1918, there was a press

reception in Berlin for the director Ernst Lubitsch’s new film Carmen, featuring the

twenty-one-year-old Polish actress Pola Negri, who would later become a huge Hollywood star of the silent era.Everyone was dressed up There was champagne An orchestra played selections from Bizet’sfamous opera The producers began to show the film, but, as it ran, Negri heard the sound of what,after a while, she recognised as gunfire It grew louder as the performance went on Finally, sheturned to Lubitsch and quietly asked if he could hear it, too Yes, he said, then shushed her ‘There’snothing anybody can do Watch the picture.’ Afterwards, Miss Negri scuttled through empty streets tothe nearest underground railway station in fear of her life.25

Sebastian Haffner remembered those final wartime days in the capital, and also their sudden end:

On November 9 and 10, there were still Army Reports in the old style: ‘Enemy breakthrough attempts repulsed’, ‘ after a brave defensive battle, our troops fell back to prepared positions ’ On November 11, when I arrived at the usual time, there was no Army Report fixed to the blackboard outside our local police station 26

It was, in fact, the day of the armistice on the Western Front By the time the guns fell silent, at eleven

on the morning of Monday, 11 November 1918, a revolution had taken place The elegant expanse ofUnter den Linden was thronged, not with the well-dressed ladies and gentlemen of 1910, but withnoisy, excited crowds – among them workers and also soldiers of the German army, many wearingred revolutionary armbands and paying no heed to their officers

Germany was now a republic Her kings and princes and dukes were no more Monarchs whosedynasties, in some cases, had lasted a thousand glittering years, disappeared from the scene withastonishingly little fuss The previous Saturday, the Kaiser had found himself standing on a railwayplatform at his Grand Headquarters at Spa in Belgium, waiting with a handful of loyal officers for theimperial train to shunt its way to him Once his transport was ready, he scuttled over the border intoneutral Holland, seeking the protection of the Dutch government It was said that his final comment,before beginning his journey into exile, had been: ‘Yes, who would have thought it would come to

this The German people are a swinish bunch [eine Schweinebande].’27

Contrary to the pronouncements of the politicians in Berlin, the Kaiser had not, at this time,

formally abdicated in favour of a regency – he would wait for three weeks in his Dutch hideawaybefore reluctantly giving up his dual crowns as King of Prussia and Emperor of Germany.28 All thesame, one thing was certain: whatever his technical status, after 9 November 1918 Wilhelm ofHohenzollern was no longer a proud monarch but a refugee from revolution – and from the victors’vengeance.

Now was the time for thinking about what all this horror had cost – not just in lives, but in marks andpfennigs for Germany, and pounds, francs and dollars for the Allies

Since August 1914, Germany had spent something like 160 billion gold marks on what was now,undeniably, a lost war Of this, around 60 per cent (98 billion) had been financed by the sale of warbonds (usually bearing 5 per cent interest) These bonds, representing a huge loan by the nation to itsown government, had been sold to the German public and business community in nine remarkablysuccessful war bond drives, beginning in November 1914 and ending in October 1918, just weeksbefore the armistice.29

Each war bond drive had been accompanied by massive patriotic campaigns, including earlycinema advertising, and of course by government assurances that, not only would the money raisedcontribute to a German victory, but the bonds themselves would provide a decent investment incomefor their holders The interest to the bond holders was supposedly still due, of course, win or lose.Not only that, but it was clear that the nation would also have to find the money to pay an as yetunspecified but predictably huge sum to the victors as reparations The Reich’s financial situation, asthe Kaiser fled and the democrats took over, was disastrous

The fighting on the battlefield was over However, the economic and financial struggle that hadbegun in August 1914 would carry through not just to the period of armistice, but to the peace treatyand far beyond

In fact, there were those who saw everything that happened to the German economy and currency bygovernment action over the next five years as simply the continuation of war by other means And tosome extent, there is reason to believe they might have been right

Footnotes

* Fruit stones (especially cherry and plum) were collected in an organised way by schools as part of a government campaign : e kernels were pressed for the nutritious oils they contained, to help make up for the shortage of imported oils.

‘I Hate the Social Revolution Like Sin’

On the morning of 9 November 1918, with a general strike called, Berlin full of excited crowds andrumours of an armistice coursing the streets, Prince Max of Baden, last hope of the old regime,decided to lay down the chancellorship he had accepted from the Kaiser barely a month earlier

The Kaiser, of course, had departed Berlin some days earlier for Spa, whence his next stop would,

it turned out, be refuge in neutral Holland But what now? Prince Max had hoped to save themonarchy by skipping two unpopular royal generations and holding the crown in regency for theKaiser’s infant grandson Even though the Kaiser had not yet formally abdicated, Max had announcedhis dethronement two days earlier In this he was supported by the leader of the party that for so manyyears had been excluded by the old Prussian-dominated hierarchy but since August 1914 had becomepart of the war establishment: the Social Democrats

Since the new Chancellor had taken power, two top-ranking Social Democrats had even beenawarded posts in the government Not yet a minister, but of prime importance to Prince Max’sproject, was the chairman of the Social Democratic Party, forty-seven-year-old Friedrich Ebert

A stocky, not especially articulate party bureaucrat, the Heidelberg-born Ebert grew up in modestbut reasonably secure circumstances as the seventh of nine children of a master tailor and his wife

He himself learned the trade of a saddler but spent little time plying it before devoting himself topolitics Sebastian Haffner, no enthusiast for a man he saw as one of the prime betrayers of theGerman revolution, painted an unflattering and somewhat patronising portrait of a bloodless politicalbureaucrat who presented ‘an unprepossessing figure’:

He was a small, fat man with short legs and a short neck, with a pear-shaped head on a pear-shaped body He wasn’t a riveting speaker either He spoke in a guttural voice, and he read his speeches from a prepared text He was not an intellectual, or for that matter a real proletarian Ebert was the type of the German master craftsman: solid, conscientious, limited in his horizons but a master precisely within those limitations; modest and respectful in his dealings with genteel clients, taciturn and commanding in his own workshop Social Democratic officials were a bit afraid of him, in the way that journeymen and apprentices are afraid of a strict master 1

Becoming a convinced socialist and trade unionist, Ebert first worked as manager of a tavern in thenorthern port of Bremen (one that functioned as a social centre for political leftists), all the whileworking his way up the Social Democratic Party apparatus He showed a strong talent fororganisation, a taste for hard work and a firm attachment to the political centre By the time he was inhis thirties, ‘Fritz’ Ebert was a nationally known figure on the moderate German left, and at the age ofthirty-four he became its national organising secretary and a member of the party’s central committee

It was telling that Ebert put a stamp on his new position at party headquarters not by making greatspeeches or coming up with new political ideas – these were always tasks he tended to leave toothers – but by ensuring that telephones and typewriters were installed in the offices, and a propermembership filing system instituted.2 He was not elected to the Reichstag until the age of forty-one, inthe socialists’ great victory of 1912, when the SPD became the largest party in the parliament All thesame, clearly the party wanted an organisation man at the top When the veteran leader August Bebel

died the following year, Ebert was elected to take his place as the party’s co-chairman.

Between 1878 and 1890 the German Social Democratic Party had been illegal Bismarck’s attempt

to crush the socialist left in his new Reich was, however, only very partially successful Despitesome of them being sentenced to terms of imprisonment, the party’s leadership and basic apparatushad remained intact Social Democrat candidates continued to be elected to the Reichstag assupposedly ‘non-party’ individuals In the January 1890 elections their vote reached almost 20 percent, making this (officially non-existent) party the largest in terms of share of the popular vote,although because of the unfair way the seats were distributed it got a mere 35 seats out of 397

The formal ban was lifted later in 1890, but for almost a quarter of a century thereafter the SPD wasstill considered ‘beyond the pale’ by the monarchist German establishment In August 1914, soconcerned were Germany’s socialists that war would bring a new political crackdown on their partythat Ebert and a fellow committee member were delegated to head for Switzerland – along with astrongbox containing the party’s funds – and to wait out the immediate emergency

In fact, Ebert, having got the party treasury to safety, returned to Berlin on 5 August He found theReich at war, and the vast majority of his party’s hitherto overwhelmingly internationalist and pacifistparliamentary representatives committed to supporting Germany’s cause Ebert never voted for thatnear-unanimous acceptance by the Reichstag of the war credits (which turned out to be a virtual blankcheque for the German government), but he lost no time in leading his party in enthusiastic support for

the Burgfrieden and for the war.

The Kaiser had declared at the onset of hostilities that he ‘no longer recognised parties, onlyGermans’ Ebert and the majority of German Social Democrats took him at his word For more thanfour years, they loyally supported all of the government’s financial demands They mediatedconscientiously between restive war workers and their demanding employers, and though they noddedwhen required in favour of a peace more in accordance with their earlier internationalist convictionsthan with the keen annexationist demands of the right, and kept up the pressure for a fulldemocratisation of the monarchical political system, they were now clearly part of the wartimeestablishment As the war went on, and many on the left became disillusioned with Germany’s cause,considerable numbers of their political representatives, including fifteen Reichstag deputies, as well

as large numbers of the original party’s most passionate activists, peeled off to form a breakawaySocial Democrat party that called for an immediate peace Ebert’s faction, still considerably thelarger, became known as ‘Majority Social Democrats’, while the anti-war left took the name of

‘Independent Social Democrats’ That was how things remained until the autumn of 1918 arrived, andwith it the sudden and, to many, surprising collapse in German hopes of victory

Prince Max was forced to take on the chancellorship because in September the armed forces – morespecifically Ludendorff – had looked at the military situation and decided that the army could not go

on On 29 September, Ludendorff marched into a meeting of the High Command and announced asmuch The Macedonian and Italian fronts could no longer hold With Bulgaria, Germany’s chiefBalkan ally, suing for peace, Turkey on its knees and Austria-Hungary likewise on the brink ofsurrender, even if by some miracle Germany managed to hold on to what was left of her gains on theWestern Front, she could not survive more than a matter of weeks before the enemy came roaring upfrom the south

Not only had Ludendorff announced the imminence of defeat, but the general – hitherto a fiercelyanti-democratic Pan-German nationalist – had also told the appalled commanders, including Wilhelm

II, that they would have to concede real liberal reforms Only in this way could they keep the support

of the masses, and mollify the enemy with whom they would soon have to negotiate Had notPresident Wilson of the United States, in whose rapidly expanding industrial power and limitlessreserve of fighting men the Entente was placing its hopes of victory, not proclaimed as part of his

‘Fourteen Points’ a conviction that the coming peace should be based not on revenge and conquest but

on the democratic self-determination of peoples? Then let Germany become the political creature thatAmerica desired!

Count Hertling, a Catholic Bavarian nobleman in his mid-seventies who had been a largelyfigurehead Chancellor for the past year or so, refused to serve a parliamentary regime On Hertling’srecommendation, the Kaiser called on Maximilian Alexander Friedrich Wilhelm von Baden Nephewand heir presumptive of the Grand Duke of Baden, in south-west Germany, Prince Max was knownfor his relatively liberal views He had opposed unrestricted submarine warfare (the step, vigorouslypromoted by Ludendorff and the ultra-nationalists, which had finally brought America into the waragainst Germany), was prominent in the Red Cross, and until the end of American neutrality hadchaired a German-American prisoner of war aid society set up under the auspices of the YoungMen’s Christian Association He immediately invited Social Democrat, Catholic (Centre) Party andLiberal Reichstag deputies to join his government The day after his appointment, as instructed by theHigh Command, the Prince formally submitted to the enemy powers his request for talks that wouldlead to an armistice and ultimately to a peace treaty based on Wilson’s Fourteen Points

Whether it was a matter of the military recovering its nerve, or of there having been a plan all alongaimed at shuffling off the blame for a humiliating peace on to democratic politicians, towards the end

of October Prince Max and his ministers found that Ludendorff had reverted from peace campaignerback to his old, diehard, victory-or-death self The military and political realities that had causedLudendorff’s decision a month earlier to push for peace had not changed However, although PrinceMax’s government had agreed to abandon the submarine campaign and to withdraw the army from theremaining occupied areas, in a third and increasingly harsh exchange of communications PresidentWilson also demanded guarantees of changes in the German political system and of military measuresthat would make a resumption of the war impossible Ludendorff promptly withdrew support for thepeace negotiations upon which he had formerly been so insistent Now, he demanded in an order tohis soldiers, co-signed by Field Marshal Hindenburg, Germany must continue to ‘resist to the utmost

of her power’

Such defiance of government and Kaiser could not be permitted On 26 October 1918 Ludendorff,for more than two years the real ruler of Germany, was dismissed, though to save embarrassment itwas claimed that he had resigned of his own volition He was replaced as Quartermaster-General andDeputy Chief of Staff by fifty-year-old General Wilhelm Groener, a transport and logistics expertwho had been the High Command’s linkman with the Food Supply Office and, for some months afterAugust 1916, Deputy Prussian Minister of War and head of the Reich War Production Office

Two days later, a crucial change in the Reich constitution finally made the Chancellor and hisministers no longer responsible only to the Kaiser, as had been the case since 1871, but to theReichstag Germany was now formally a constitutional monarchy.3 Prince Max was from this point ontheoretically free to conduct policy as he desired, or at least as events dictated, but in fact power hadalready begun to slip from his hands This time, it was not the High Command that presented thethreat, but the mood of the common people

On 24 October, Admiral Scheer, commanding the German North Sea Fleet, issued secret orders forthe fleet to prepare to put to sea once more Senior naval commanders had decided, in defiance of theBerlin government, which was in the middle of delicate armistice negotiations, to take on the British

fleet in a ‘decisive battle’ (Entscheidungsschlacht) – a final, suicidal attempt to salvage what they

perceived to be the German navy’s honour

Despite the secrecy surrounding Scheer’s order, word spread through the ships waiting at anchoroff the North Sea naval port of Wilhelmshaven The men below decks had been penned up in port incramped conditions and under harsh discipline for more than two years since the inconclusive Battle

of Jutland (known in Germany as the Skagerrakschlacht) in June 1916 Unsurprisingly, most were not

keen on dying just as peace was about to break out, simply to satisfy the naval elite’s desire for a

heroic seaborne Götterdämmerung Open mutiny followed During the night of 29-30 October,

several warships in Wilhelmshaven were seized by their crews One of the sailors would write in hisdiary attributing the cause: ‘Years and years of injustice have been converted into a dangerouslyexplosive force that is now coming to a head.’4

The Imperial Navy stood on the brink of disintegration, but the naval command held its nerve.German submarines and torpedo boats took up position among the ships off Wilhelmshaven Themutineers were given a deadline If they did not return to their stations, these vessels would torpedotheir ships At the last minute, the crews gave in The ships were handed back to their commanders.The mutiny was, for the moment, over

Nonetheless, in a victory of sorts for the men, the plan for the ‘decisive battle’ was abandoned Theordinary crew could clearly not be trusted to die ‘with honour’ The fleet was split up, with the 3rdSquadron – whose crews had been the most troublesome – ordered to enter the North Sea Canal andsail through to Kiel, the great German naval port on the Baltic On the way through the canal, forty-seven naval ratings and stokers considered to have been ringleaders in the rebellion were picked outand placed under arrest On arrival at Kiel, they were transported to a naval prison

The uprising at sea might have been stifled, but on shore it was a different story In Kiel, rumoursabout the arrested mutineers spread like a virus among the discontented naval personnel On 1November, several hundred gathered at the trades union building They sent a petition to the localnaval command, demanding that the prisoners be freed It was ignored

The next day, the sailors found the entrance to the trades union building barred by police Inresponse, an even larger group of protesters met a few streets to the south at the Großer Exerzierplatz,once a parade ground but now a broad public square in the centre of the city Flyers were printed andcirculated On 3 November, another meeting on the square attracted several thousand protesters, nowincluding both sailors and war workers of both sexes This time they demanded not just the liberation

of the imprisoned mutineers, but also an end to the war and an improvement in the food situation Asthe demonstrators attempted to move out of the square towards the military prison to demand theircomrades’ release, in the process ‘liberating’ some weapons from nearby military billets, theyencountered an army unit Fire was exchanged Seven protesters were killed and twenty-ninewounded The lieutenant commanding the army unit was seriously injured and taken to hospital

By the next morning, 4 November, armed groups of sailors were roaming the streets In a finalattempt to restore discipline, the commander of the big naval base at Kiel-Wik, two miles or so to thenorth of the city centre, ordered all sailors and soldiers to form up for a roll call on the main parade

ground The commander’s appeal to the men’s loyalty failed to prevent spontaneous demonstrationsagainst his authority Soon the men from the base had joined up with those already active in the city.The soldiers of the city garrison likewise refused orders to resist the rebels The city’s militarygovernor received a delegation of workers and sailors and was forced to grant their demands,including an assurance not to call in military assistance from outside – at one point urged on by athreat by the mutineers to turn their ships’ guns on the quarter containing many officers’ privatevillas.5

According to a personal account by one of the leaders of the uprising, the military governor had,actually, broken his word:

That evening, we then got the news that despite the governor’s declaration four outside infantry units were marching in our direction.

We immediately jumped into our automobile and drove straight towards them We reached them just by the post office, and spoke with them Then I requested that they either give up their weapons or join the revolutionaries The infantrymen joined our revolutionary movement The officers were disarmed 6

With that, there was no military unit prepared to support the status quo At the end of the day, the city

of Kiel was in the hands of the mutineers and their supporters Within hours, ‘soldiers’ councils’ hadbeen formed ‘Workers’ councils’ would follow The next morning, disturbances had also broken out

in the ports of Wilhelmshaven, Lübeck and Cuxhaven Workers’ groups were also readyingthemselves for protests in Hamburg, Germany’s second largest city.7

On 5 November the new masters of Kiel issued a list of demands:

1 Release of all detainees and political prisoners

2 Absolute freedom of speech and the press

3 Lifting of censorship of mail

4 Correct treatment of men by their superiors

5 Return of all comrades to ships and barracks without punishment

6 The fleet under no circumstances to leave port

7 All protective measures involving the shedding of blood to cease

8 Withdrawal of all forces not belonging to the garrison

9 All measures for the protection of private property to be established by the soldiers’

council with immediate effect

10 Off duty, no more superior ranks

11 Each man to be permitted complete personal freedom between one period of duty and the

next

12 Officers who declared themselves in agreement with the measures of the now established

soldiers’ council to be welcomed into their midst All the others to quit the service

immediately without claim of compensation

13 Every member of the soldiers’ council to be freed of all duties

14 All measures arrived at in future to be implemented only with the agreement of the soldiers’

council

The German revolution had begun.

By 9 November, the Kiel mutiny had spread to most of the country

The sailors had set off for other parts of Germany, on the way successfully calling on local people

to set up their own revolutionary councils In Munich on 7 November, the revolutionary movementtoppled its first crowned head Before a crowd of some 60,000 assembled on the Theresienwiese,site of the modern Oktoberfest, the left socialist leader Kurt Eisner demanded an end to the war, aneight-hour working day and improved unemployment benefits, the creation of soldiers’ and workers’councils, and the abdication of Ludwig III of Bavaria The seventy-two-year-old king quicklydisappeared into exile

There was scarcely a town or city of any size in Germany, during these dramatic and, to many,exhilarating few days in November, where the old authorities had not been pushed aside and the localgovernment assumed by revolutionary councils The exception, curiously enough, was Berlin All thesame, on 8 November, the breakaway Independent Socialists (USPD), who had split from the mainparty because of its leadership’s continuing support for the war, had declared a general strike and day

of demonstrations for Saturday 9 November It was a direct challenge to Max of Baden’s government,which had banned all public gatherings

Calls for the abolition of the monarchy were becoming louder by the hour Prince Max, nervous thatthe capital would dissolve into what he viewed as anarchy, decided to take action He summonedfrom its base south of Leipzig the 4th Rifle Regiment, which had fought against the Bolsheviks inGerman-occupied Russia and was seen as a particularly loyal pillar of the Prussian royal house.These reinforcements arrived on 8 November Early on the following morning, 9 November, theregiment’s officers began to distribute grenades to their men, with the obvious intent of suppressingany demonstrations by force But the riflemen, or at least the lower ranks, were not quite the obedienttools of the palace the Chancellor had believed them to be Few, it turned out, were prepared tomassacre their fellow Germans for the sake of what?

To the astonishment of their superiors, the men of the 4th Rifles insisted on engaging them indiscussion Not satisfied with the officers’ answers, they voted to send a delegation to the SocialDemocratic Party requesting political clarity They were duly addressed by the Social DemocraticReichstag Deputy and party central committee member Otto Wels, who in an eloquent speechappealed to them to take the side of the people and of his party His appeal succeeded So convinced

were the riflemen that they voted to send an armed unit to the offices of Vorwärts (‘Forward’), the

Social Democratic Party’s official newspaper, charged with protecting its production

When it became clear to Prince Max that even such elite troops could not be relied on, he realisedthat the game was up Having secured the Kaiser’s somewhat ambiguous assent to abdication over thetelephone line from Spa, the Chancellor did not wait for a formal written announcement beforereleasing the news to the press

Then, at around midday, Friedrich Ebert appeared in the Reich Chancellery with a delegation ofSocial Democrats Prince Max admitted that without any loyal troops at his disposal he could nolonger control the masses The government should be in the hands of a man of the people Would theSocial Democratic leader take on the job of Chancellor? But first, could they settle the question ofwho was to be regent, acting on behalf of the putative child-emperor who would succeed if the Kaiser

and Crown Prince gave up their rights?

That same morning, Vorwärts had published, apparently approvingly, a declaration announcing the

formation of a regency Now, however, Ebert told Prince Max that the survival of the monarchy could

no longer be guaranteed After some show of reluctance, he agreed to take on the chancellorship.Ebert remained prepared to keep the monarchy, subject to a parliamentary decision on the form thepost-war state should take For now, though, the priority was to keep control of events, which meantgoing with the flow of the popular demonstrations As Philipp Scheidemann, chair of the SocialDemocratic parliamentary party and, since October, an appointed State Secretary, effectively aminister in Prince Max’s government, had said some days earlier: ‘Now it’s a matter of puttingourselves at the head of the movement, or there’ll be anarchy in the Reich.’8

Ebert, and other of the moderate Social Democratic leaders, were not – or were no longer – radicalfirebrands Even before the war, the march of the moderates had been a feature of the party’sprogression, to a point where in the last elections before the war it had been supported by more than athird of the population, far beyond the loyal ranks of the industrial proletariat

Tellingly, when on 7 November Ebert had pressed Prince Max for the Kaiser’s abdication and hisreplacement by a regency, his reasons had been far from revolutionary According to Prince Max’slater account, as the two men walked around the autumnal setting of the Reich Chancellery’s garden,

he told Ebert of a plan to travel, if necessary, to the Imperial Headquarters at Spa and persuade theKaiser to abdicate in favour of regency by the Kaiser’s second son, Prince Eitel Friedrich ‘If Isucceed in persuading the Kaiser, then do I have you on my side in the fight against socialrevolution?’ the Prince asked Ebert The Social Democrat leader did not hesitate in his answer: ‘Ifthe Kaiser does not abdicate, then the social revolution is unavoidable But I don’t want it, I hate itlike sin.’9

In the end, Prince Max did not go to Spa The wildfire of revolution was sweeping the country andthreatening Berlin The Chancellor could not leave the capital Instead, the not strictly accurateannouncement of the Kaiser’s abdication two days later followed an untidy sequence of long-distancephone calls

So, at around noon on 9 November, Germany had no Kaiser, but technically remained a monarchy.For about an hour and a half, that is For, while on 7 November it had been possible to discussquestions of monarchy or no monarchy as if these were debatable alternatives, events outside theChancellery were well on their way to changing the country for ever

While these conversations were going on in Prince Max’s office, vast crowds, numbering hundreds

of thousands, had assembled in the heart of the city Demonstrators surrounded the Reichstag and theparkland adjacent to it, pouring over into Unter den Linden and from there to the nearby BerlinStadtschloss (City Castle), the Kaiser’s official residence when he was in the capital The masses asrepresented at that moment in the streets were calling with one voice for the end of the monarchy Bythe time Friedrich Ebert accepted Prince Max’s offer of the chancellorship (with no monarch, noregent and no other kind of head of state to formally appoint Ebert, they had to simply ignore the rulesand just do it), rumours were spreading throughout the government quarter that the crowds were to beaddressed by various far-left figures The speakers would include Karl Liebknecht, anti-warfirebrand, veteran leftist leader and co-founder of the ultra-radical ‘Spartacist’ group (named after theslave rebellion in ancient Rome), who was well known for his support of the Bolshevik regime inRussia

It was not Ebert who personally took control of the crucial moment, however He had returned fromhis meeting with Prince Max and was having a meagre wartime lunch of potato soup in the restaurant

of the Reichstag Meanwhile, the crowds took the famous phrase carved two years earlier beneath the

main pediment of the building, Dem Deutschen Volke (To the German People), seriously, and it was

into the building that they swarmed to make their feelings clear

It was now shortly before 2 p.m A group of demonstrators entered the deputies’ restaurant Ebertwas urged by the intruders, who were Social Democrat party loyalists, to address the crowd.Liebknecht was planning to declare a socialist republic on Bolshevik lines, they said The moderateleft had to assert control of the situation The newly minted Chancellor, not a natural orator, declined.However, also among the deputies having lunch was Philipp Scheidemann At fifty-three, the formerprinter from Kassel was one of the main leaders of the party, chair of the parliamentary faction andvice-president of the Reichstag An easily recognisable figure with his bald dome and goatee beard(strangely similar to that affected by the departing Kaiser), Scheidemann, unlike Ebert, was known as

a rousing orator

According to his memoirs, Scheidemann learned enough in the minutes that followed to convincehim that the talk of a regency was no longer realistic Clearly, if Scheidemann did not take immediateaction, then someone else – someone with much more radical plans – would do so

Leaving Ebert at the table, Scheidemann and some companions navigated their way through theReichstag’s labyrinthine corridors until they reached a big window overlooking the front of theReichstag, where many thousands of noisy demonstrators were gathered Perched on the narrowbalcony in front of the open window, Scheidemann addressed the crowd in an improvised oration thatended with the words:

The Kaiser has abdicated He and his friends have disappeared, and the people have proved victorious on all fronts Prince Max of Baden has transferred the office of Reich Chancellor to Deputy Ebert Our friend will form a workers’ government to which all socialist parties will belong The new government must not be impeded in its work for peace and its concern for work and bread Workers and soldiers, be aware of the historic importance of this day: unheard-of things have occurred Great work lies ahead of us, a task that cannot be shirked Everything for the people! Everything through the people! Nothing can be permitted to happen that brings the workers’ movement into disrepute Be united, loyal and aware of your duty That which is old and rotten, the monarchy, has collapsed Long live the new! Long live the German republic! 10

The speech might have sounded radical in tone Except for Scheidemann’s historic, off-the-cuffproclamation of the Republic, however, it was nothing of the kind Essentially, the routine socialistrhetorical devices aside, Scheidemann was telling the war-weary masses to knuckle down, stoprevolting and get on with the disciplined work of saving Germany under the new, democratic regime

When Scheidemann got back to the restaurant, a furious Ebert - ‘livid with fury’ by Scheidemann’sdescription11 - banged the table in outrage at his colleague’s presumption The future form of theGerman state was something for a Constituent Assembly to decide! But it was, of course, too late forsuch niceties There is little question that Scheidemann’s prompt action was, under the circumstances,correct

It was not, in fact, until around four in the afternoon that the firebrand Karl Liebknecht addressedanother crowd from another balcony – this time, in a piece of deliberate stage-setting, on an upperfloor of the royal Stadtschloss – and made his call for a far more profoundly revolutionary change

Liebknecht declared a ‘free socialist republic’, based on the soldiers’ and workers’ councils thathad been established in the past few days The new Soviet-style state would reach out to ‘our

brothers throughout the world and call on them to complete the task of world revolution’.12 Afterhis speech, according to the American journalist Ben Hecht, the Spartacist leader went and lay down,

in his underwear, on the bed in the Kaiser’s private chamber, where he caused the bedside table tocollapse under the weight of his briefcase full of files.13

For all Liebknecht’s passion, and for all the enthusiasm of his supporters, his proclamation turnedout be something of a damp squib The overwhelming majority of the crowds that day in Berlin didnot want a repeat of the Bolshevik coup of October 1917 There were big crowds around the so-called ‘government district’, but no truly transformational uprising occurred that day Scheidemann’sunauthorised proclamation, and the news that Ebert, a Social Democrat, had assumed thechancellorship, were sufficient for most of the people thronging the streets, eager for change ManyBerliners recalled only too well that Lenin and his comrades’ seizure of power had been followed, inJanuary 1918, by their violent dismissal of the freely elected parliament – the first in Russia’s history– and the rapid establishment of a one-party dictatorship Certainly the likes of Scheidemann andEbert were acutely aware of the danger of the quasi-tyranny of the old monarchy being replaced, as inRussia, by an absolute tyranny of the far left

While all the speech-making was going on, one eyewitness – a businessman just trying to get to ameeting with his lawyer at his office on the Wilhelmsplatz – noticed this strange passivity andcontrasted it with the potentially world-changing events taking place

Young boys of sixteen and eighteen had opened fire at the war ministry with shotguns because no one would open the doors There was said to have been answering fire from the windows Pointless, infantile behaviour Serious men are calling for calm, and commanding the shooting to stop It is a real revolution, but strange – the great, world-changing thoughts and events, and these boys, children with red, hot faces contorted into unpleasant expressions, who look more like they are players in a game of cops and robbers than bearers of a revolutionary power that will move the world.

There is a complete lack of enthusiasm among the masses on the street The public is standingcuriously to one side, and being entertained by the commotion as if it were at the theatre Motorvehicles roar past, and the well-dressed middle class people in the Leipziger Strasse humbly edgeaway to the side of the street.14

The day of the German revolution revealed a people tired of war and the old ways, eager for peace,and eager for the most part, at this point, to give a new, democratic and, it was hoped, fairer politicalsystem a chance On 9 November 1918, the men of the imperial establishment appeared to retreat, as

if they, too, understood that their system had failed What was the point of an elite of warlords andmonarchs if in the end they led their country to defeat? In a way, it was surprising that the Germanpeople let them off so easily

However, if they had come to despise the ancien régime for its failures, most Germans, especially

of the better-off classes, feared the anarchy that might follow the end of the monarchy And, in somecases, they feared unemployment as a result

Curt Riess, sixteen years old at the end of the war, was the son of a Berlin tradesman who hadprospered more than most under the old monarchical regime This was so because Riess’s fathermade and sold ceremonial uniforms and liveries for the various German royal courts, from Bavaria,Württemberg, Saxony and the like, up to and including that of the Kaiser himself His son remembersthat in the shop there was a closet neatly filled with hundreds and hundreds of different uniformbuttons And the sign in front of the shop sported the warrants of the various German dynasties towhich he was a supplier of court dress ‘by royal appointment’